Mr Sebastian said a 0.1 per cent fall in the participation rate - the proportion of the working age population either employed or looking for work and ready to start - to 65.0 in January was not a big concern.

"Previous reports that we have published on participation rates and demographics have highlighted that a lot more of the younger workforce are opting for higher education given the sluggish labour market," he said.

"And as activity levels pick up and employers are keener to hire, the participation rate is likely to also to rise."

Mr Savanth said future employment data would be carefully watched by the Reserve Bank of Australia in the coming months, but the chance of a March rate cut has receded after the release of the latest jobs figures.

The central bank kept the cash rate at three per cent at its February board meeting this week.

Macquarie senior economist Brian Redican said the jobs figures showed employment growth remained sluggish over the past few months and another interest rate cut could be on the way soon.

"The general sluggishness of these labour market data are consistent with a rate cut," Mr Redican said.

"Because unemployment is only rising slowly though, it hasn't given the RBA any urgency to cut the rate, so by itself there won't be the trigger.

"In an environment where the economy is losing a major driver from mining investment and the replacement drivers for growth are pretty thin on the ground, these data are consistent with the RBA continuing to trim rates."

However, HSBC Australia chief economist Paul Bloxham said figures showed the labour market was more resilient than many believed and vindicates the RBA's decision to keep its cash rate on hold.

"While picking turning points in the economy is hard, we continue to think that the soft patch may be behind us," he said.